Accidents happen to the best of companies. It is how those companies respond to big industrial accidents — how they learn and change as a result of those lessons — that shows the quality of an organization. One of the many readers to comment to me this week on BP’s situation in the Gulf of Mexico put it in the context of his own experience working as an engineer at Monsanto Chemical. His lesson is so compelling that I have reproduced it below in its entirety — Bob.

In 1947 a tanker blew up in Texas City harbor, ironically the same city where BP had a big refinery accident in 2005. The 1947 explosion leveled Monsanto’s plant, killed hundreds and destroyed thousands of homes. It registered on seismographs as far away as Denver. While the accident was not Monsanto’s fault, it alerted management to the destructive power of a chemical process and provided the motivation to get super serious about safety. Of course back then most of the company’s management had engineering degrees and thoroughly understood the chemistry and physics involved. That, too, is probably a big difference with today’s industry. Few executives today have engineering or science degrees.

When I joined Monsanto in the late ’70’s they put their new hires through a three day course on the company. A couple hours were dedicated to the 1947 Texas City disaster — what happened, what the company learned, what the company does today. Industry often deals with dangerous processes, hazardous materials, and tremendous amounts of energy. The slightest mistake can cause a disaster.

Monsanto established a very effective safety culture after Texas City. They developed technology to better control chemical process. They developed standards to built safer facilities. They didn’t do this alone. They worked closely with other chemical companies. The whole industry invested in best practices and shared what they learned. When I started my job I was given a set of “standards” consisting of 3 binders, each 6 inches thick — serious reading.

A couple months after Bhopal we were given a briefing. A team had reverse-engineered Union Carbide’s process and from the press reports managed to piece together a pretty complete picture of what happened. After the briefing an existing company policy was reiterated — all plants are to be built to USA or local country safety standards, whichever is better. Even if the local country does not have safety standards, Monsanto’s are to have world class safety. No exceptions.

About a year after Bhopal a blue ribbon team had just finished a company wide review of Monsanto’s operations. They identified and rated all hazardous operations and materials used by the company, and assessed the risk if an accident occurred. The result of the study was sweeping changes in how much material was stored in each facility. Many processes and lines of business were deemed too risky to continue and were shut down. Monsanto walked away from tens of millions in business to reduce risk and improve safety.

Months later the CEO implemented a number of new programs. For the first time in the industry, Monsanto invited the local community into its facilities to show them what the company did. What materials were used. What products were produced. They equipped and trained local emergency response teams and hospitals to be better prepared for an accident. The CEO announced a plan to further reduce emissions by 90 percent, far exceeding EPA rules. If a process could not meet the new company rules or was too expensive to retrofit, it was shut down. Again the company shut down tens of millions of production.

The message was loud and clear. The company would be a good citizen. It would operate its plants safely. It would constantly try to reduce emissions. And if it couldn’t it would rather shut down that business. The emphasis was on results, not words.

130 Comments

Fair play to Monsanto, too many companies put money before product, safety etc.

I think the point about executives not being engineers or scientists any more is important. How many executives really understand what they are dealing with? That applies equally to Cars, Tech and many other industries too.

Montgomery
June 17, 2010 at 6:52 am

BP’s CEO Tony Hayward has a PhD in geology from the University of Edinburgh. He started with the company as a rig geologist in 1982 and worked his way up through the company holding numerous technical positions.

Yes, BP has technical people at the top but many companies don’t. In this case BP is even more at fault.

Montgomery
June 17, 2010 at 2:27 pm

I have to spell my point out for you? Okay.

The topic du jour is BP. Now the armchair quarterbacks are saying that there aren’t enough executives with backgrounds in science or engineering at the top of these companies to prevent such disasters. But BP itself, which has a tech-heavy leadership team, disproves this conclusion.

Hayward was specifically brought on to reform the company after the incidents in Texas City and Prudhoe Bay. He took over from Baron Browne of Madingley who holds a degree in physics from Cambridge University and is the current President of the Royal Academy of Engineering and President of the British Association for the Advancement of Science.

None of this helped BP’s safety record!

In my corporate experience, my colleagues with the greatest technical expertise and aptitude are among the worst managers and leaders. They don’t trust others so they fail to delegate and end up getting bogged down in details. This impairs their ability to see the big picture and provide meaningful leadership across a large body of departments and affiliate businesses.

Effecting a shift in corporate culture (such as embracing a “safety first” mentality) requires a completely different skill set form that which makes an engineer or scientist successful. It has more to do with personality than specific knowledge. Obviously a CEO must be bright enough to recognize worthy corporate objectives, but he has to possess the force of will to make it happen. He must be more comfortable standing before tens of thousands of employees and pushing them.

Most techies simply don’t have it. For every Jack Welch, who successfully transitioned from scientist to outstanding CEO of a multinational corporation, there are thousands of companies that lay in ruin because they were led by an inept founder or technician who pulled a Peter Principle at the top.

In short, if BP’s board of directors were serious about safety, they’d invest in a serious ass kicker*, not a pencil pusher, to get the job done.

(* I don’t mean Obama, heaven help us.)

Steveorevo
June 17, 2010 at 6:28 pm

“Most techies don’t have it”

Curious argument. Could college drops outs like Steve Jobs or Bill Gates do better? It goes well beyond that. I agree, the Bush administration had plenty of degrees in it but they still could not read a safety report and understand it’s warnings. However, Steve and Bill hire nothing but the best, degree holding engineers to work for *and* manage their companies. Kick ass is a quality independent of that. To base success in embracing ‘safety first’ as a quality not found in “most techies [that] dont’ have it” should be approached with caution. that simply says your corporate experience is biased by working for too many failures.
Try a successful one for comparison and I’m sure you’ll find the extra education less of a hindrance and more of a compliment.

Montgomery
June 18, 2010 at 5:57 am

@ Steveorevo:

“To base success in embracing ’safety first’ as a quality not found in “most techies [that] dont’ have it” should be approached with caution.”

I don’t mean to say that techies don’t understand safety or couldn’t design an outstanding safety program. I’m saying that techies are often poor leaders of men (and women) and therefore lack the charisma and drive to transform the culture of a multifaceted corporation, be the change safety or anything else.

The ability to lead effectively is independent of a school degree or professional certification. Thus, some guy who audited a calligraphy class in college might become a more successful CEO than an Englishman with a PhD in Geology.

The best leaders tend to be generalists, not specialists. They have to highly developed understanding of finance, operations, technical (R&D), marketing, public relations, safety, human resources, politics, etc. And then to make it all work, they have to possess an intangible leadership quality that endows them with the ability to effect change.

Montgomery
June 18, 2010 at 6:20 am

@ Steveoreno:
“Try a successful one for comparison and I’m sure you’ll find the extra education less of a hindrance and more of a compliment.”

Please do not misunderstand what I have written as being anti-education (I write with an MBA/e-Business degree). Of course, more formal education can help most people most of the time. But broad education is more important for someone at the top than in-depth and narrow expertise. And neither is mandatory if the person is curious enough to learn on his own.

Deep specific knowledge does not help one lead a large business. In fact it can become a hindrance if the person is never able to see beyond his specific silo of expertise.

It’s worth pointing out that the BoD of BP is the driving force, as it is in most corporations. BP has had a profit, safety be damned, attitude for decades. Hayward’s “I don’t recalls” during his testimony, and the current (Swiss) Chairman’s invisibility make the point. Having the science/engineering knowledge matters, as evidenced by the doc trail released by Congress and others. That doc trail may, or may not, lead directly to Hayward. In at least some parts of BP, the risk of doing the well cheap and dirty to recoup some lost time was clear and communicated.

Hayward is in a lose-lose position here. Either he kept himself informed, as one might expect a CEO to do; drilling wells is a major function of BP, and this well was clearly a problem, which would demand that the CEO be in the loop. If he takes the position seriously, not just a sinecure. Or, he kept himself out of the loop; leading to the immediate conclusion that any random sock puppet could run BP just as effectively. He clearly evidenced no clue, or perhaps care, to his position. Which leads, inevitably to the conclusion that he’s sure the BoD, which doesn’t give a rat’s sphincter about the issue, won’t fire him.

Travers Naran
June 17, 2010 at 6:44 am

Dagnabbit! This is why I love professional Engineers! *sniff*

Scott
June 17, 2010 at 6:54 am

Accident in 1947, which prompted changes… this fellow joined Monsanto in the 70s.

That implies they worked on those changes for at least a couple of decades.

But BP is supposed to match those sorts of changes in a couple of months?

This is, no doubt, their wake-up call… but I wouldn’t expect radical shifts out of such a huge entity in such a short time.

A different Russ
June 17, 2010 at 8:47 am

BP has been pumping oil for longer than most of us have been alive. They had a huge refinery accident in Texas in 2005. If they still need a wake up call, they ain’t never waking up.

Texas City in 2005 WAS BP’s wakeup call and five years is plenty of time to make changes even at a multinational. The current CEO was brought-in specifically to make those safety changes and he has clearly failed. Golden parachutes will shortly unfurl.

PB
June 19, 2010 at 3:33 pm

Cringely is right. 5 years since the Texas City incident was enough time for BP ( & I’m British ). Sandoz, a multi-national, fixed its ways after the 1986 chemical spill that killed everything in the Rhine ( an international incident that made Germany angry ). I worked for Sandoz in the following years, and their safety culture was frustrating when you just wanted to get things done, but it was effective. No major foul-ups afterwards. So this can be done in a comparable multi-national.

Joe Dokes
June 17, 2010 at 7:04 am

Talkingfuture,

Your point is a bit unclear, do you mean is it not important that company officers are/were engineers or that at least some of a company’s leaders should have a technical background?

I believe one of the key problems with American business was the creation of the MBA and the belief in business schools that technical knowledge was not very important that the ability to “manage” could translate across any industry was part of the corporate problem that has led to many American business failures.

For example, Only one CEO in the last twenty years at GM was an engineer. If you look at truly successful companies their leadership is often very passionate about the product they provide. Apple computer is a good example, Jobs may not have the best technical background but he is passionate about making a killer product. Even MS under Bill Gates, Gates had a technical background, and wanted to make great products. Balmer on the other hand is simply a sales guy, and we’ve seen how well the company’s done since Gates left.

Great companies have two qualities in their leadership neither of which an MBA really helps. First a vision for a product or service that is transformative, or the real desire to be the best. This can best be described as being artistic in nature, these leaders have an ideal in mind and a commitment to get as close to that ideal as possible. Second, they have the business sense to know how close to get to that ideal without going broke.

Regards

Joe Dokes

TemporalBeing
June 17, 2010 at 10:13 am

Gates never wanted to make _great_ products – just products that were _good enough_ to get the job and the mass market.

Jobs has quite a technical background as well; but excels most at marketing and leadership. Under his reign, Apple has always done things in a very technically correct, fashionable, and purposeful manner. You want to play on Apple products? You follow their technical specifications and designed purpose. This has lead to great products from Apple – the Mac, the iMac, the Mac-mini, the iPod, the iPhone, and lots more.

Glenn G
June 17, 2010 at 12:20 pm

you forgot a few products of Steve Jobs’ eras…the Lisa, the Newton…
but then again, it’s easy to see why you forgot to mention them.
They were utter failures of design and marketing. Yes, I realise that
for most it is “cool” to point to Apple’s successful product lines and
say “See what Steve Jobs brings to Apple!!”, and at the same time
denigrate anything and anybody associated with Microsoft, hence
your rather dismissive parlance towards Bill Gates. But heck, go
ahead and bask in the comfort of your RDF, and never let little things
such as facts stand in the way of making the appearance of possessing
a higher level of sentience.

Okay guys, now we’re just throwing around random statements. Gates IS very technical but he also dropped out of Harvard after his first year, never to finish. Ballmer DID finish Harvard WITH A DEGREE IN APPLIED MATHEMATICS then went on to get an MBA from Stanford. Yes, he has always been viewed as a lightweight by the Microsoft tech staff but that doesn’t by any means mean he’s an untalented suit — just a guy too gonzo for the job he is in. Jobs, too, dropped out of Reed College after one year and has no formal technical background AT ALL. He couldn’t code himself out of a phone booth and makes no bones about it himself. We can generalize about nerds and suits to a certain point, but when we start to talk about individuals it gets a lot harder. Stick to the facts, men.

Glenn G
June 17, 2010 at 3:18 pm

Bob,
It would be simple to “stick to the facts” IF there had been any facts introduced!
This blog entry was done based solely on observations by an employee of Monsanto that shared what he was required to do to obtain that employment, and that somehow the methods utilized by Monsanto should have been emulated by BP in order to prevent the current catastrophic failure in the Gulf of Mexico…
maybe that would have helped, maybe not. The premise of a lack of university degrees of certain level contributed to the failure also has not been demonstrated.
It’s been my observation over many years in my career (in healthcare) that while
a degree may be a requirement, it doesn’t always mean the person can perform the task. Some individuals learn test material long enough to pass an exam…2 weeks later they can’t recall what the exam was about. They still have their degree! Maybe BP should take all the degrees of those CXOs and use them to plug the leaking oil well?
Of course, we could just follow the Apple marketing methods of late, pick up all the tarballs on the coast, and sell it as iCrud…”It’s magical, revolutionary, allows you to use crude oil the way you want! Distill your own gasoline or diesel fuel, make your own plastics!”

David W.
June 17, 2010 at 7:12 am

I know many chemical engineers, and I can tell you one thing about them: They get very little sleep at night. They are constantly thinking about the biggest disaster that can hit their plant and how they have to respond to it. They are constantly making changes in procedures and protocol. Every time there’s a minor accident or incident in a plant anywhere in the world, they are analyzing it.

They all know one thing: A single small slip can lead to the loss of thousands of lives, mass evacuations and untold billions in liabilities. They know disaster could come from within the company or from the outside.

One engineer told me that if an accident has a mere one in a million possibility of happening in a given decade, you have to multiply it by the thousands of plants out there and by the dozens of decades that the industry has been in operation. Thus, even a one in a million possibility during a ten year period is too big a chance to take.

Thus, they stay up all night awake in their beds worrying about what could go wrong and what you need to do. What if the wind is blowing towards town? What if a train derails in the middle of the night in town while carrying chlorine gas to your plant? What if an earthquake happens or lighting strikes? What if an engineer is careless?

I wonder if the petrochemical industry thinks the same way while they’re drilling. Maybe they feel so isolated in the water. Maybe the competition to drill is too intense. Maybe the money is just a little bit too good. But, about once a decade, we have a disaster that everyone in the industry passes off as just an unpredictable fluke and seem helpless in abating the destruction.

BP’s disaster plan pretty much consisted of a bunch of people and places to call in case of a problem and not much else.

swschrad
June 22, 2010 at 6:59 pm

not just chemical engineers, although the “boom” is much more noticeable there.

broadcast engineers in the age I grew up checked parts availiability from multiple sources at least annually. three sets of the index cards existed in the facility I knew… one at the studios, one at the transmitter, one at the chief’s house… you could reverse-engineer the station from that card deck and a box of PO forms overnight.

IT systems engineers with responsibility typically have basic operating info stashed at home as well as the office, and have a care as to where the backups are stored, at a minimum. do planes fly overhead? if one lost a wing, could it simultaneously hit the operating center, the primary, and the secondary backup sites? my outfit alas qualified. we moved a tape stash and copied the licenses.

point is, you are not doing your job if you let somebody else provide all the answers, wherever you work and whatever you do.

somebody has to be the iron fist to make sure, dammit, we do the right thing. but everybody has to work to standards at their worst. weakest link, and all.

Mark S
June 17, 2010 at 7:22 am

A priceless quote by Tony Hayward, soon after he took over at BP:

“We had too many people who were working to save the world. We sort of lost track of the fact that our primary purpose in life was to create value for our shareholders.”

He seems to be doing pretty well on creating value for his shareholders now, doesn’t he?

Jim O
June 17, 2010 at 10:05 am

Hayward is right.

Don’t get me wrong; I’m not disagreeing with your comment about BP and shareholder value with regards to the Deepwater Horizon incident and its aftermath.

However, the primary purpose of a publicly-traded company such as BP *is* to create shareholder value, and for its CEO, board, and management to think or act otherwise would be unethical.

Mark S
June 17, 2010 at 11:38 am

Regardless of the cost to non-shareholders?

Sparky
June 17, 2010 at 11:59 am

Creating shareholder value is one of those great weasel phrases. It can mean anything. It can be used to justify anything. All actions can be attributed to the act of “creating shareholder value” as there is no solid metric behind it. Twist some numbers around, ignore unfavorable figures, and voila – you’ve increased shareholder value.

I’m sure the actions that lead up to Deepwater Horizon incident looked like they would help the bottom line and “create shareholder value.” But the impact of those mis-steps are going to hurt BP and its vaunted shareholder value. Clearly, the focus was on the wrong goal.

Ah, that olde chestnut. Not true. The primary purpose, in fact, of a corporation is to privatize profit and socialize cost. The side effect is to value shareholders, and managers, over all others. The point of Bob X’s posting is that some corporations, some times (in the case of Monsanto, not for all time; I lived near, and worked summers in, one of their plastics plants in the late 60’s, not safety first at all) view risk assessment as an honest undertaking, rather than an exercise in sloughing off responsibility to Gummint. Boehner and Barton are examples of the Stooges out there who memorize Ayn Rand, but forget the whole thing when they get caught screwing up.

Shareholders and managers of BP *should* end up without a pot to piss nor a window to toss it out of. Were it not for the Right Wingnuts who enabled the Banksters to get Too Big to Fail, they should too. On object lesson in greedy failure concentrates the mind.

Ronc
June 18, 2010 at 1:07 pm

Since the government makes no investment in the corporation, but takes a huge portion of the profits, first from the corporation as a whole and then from every salaried employee and investor in taxes it seems to me the net result is to socialize profit and privatize risk.

Not even close. The Supreme Court, a hundred or so years ago, asserted that corporations were “persons”, but without the level of responsibility of real “persons”. Too bad, since many of them deserve to be in jail. As to taxing, since they are “persons”, they will be taxed just as any other person. The so-called double taxation is sophistry, since the “owners” are insulated from fiduciary responsibility. If that is uncomfortable, corporations could always reorganize as partnerships, and be taxed as simple owners. But, then they’d be financially responsible, their individual assets at risk, for screw ups. If that’s what you prefer, go for it. Fact is, the Banksters (most of them) that caused our current mess had been partnerships, and didn’t go bonkers until they had reorganized as corporations, devoid of personal risk of loss.

As to investing and risk, only if one buys shares in a public offering is one “investing” in a corporation, otherwise you’re just a gambler betting that the share is worth more than the other gambler who sold it cheap (you think). It’s only gambling, not investing; none of that money goes to the corporation to build or buy any physical asset. You’re just a gambler. All you are risking is that your betting money. You are not risking your personal assets. It just a casino, nothing productive.

Ronc
June 19, 2010 at 1:38 pm

So if you can tax the corporation as a person, there is no need to tax the people who make up the corporation. By limiting liability the government is trying to justify the double taxation. If the government made no helpful rules there would be no corporations and no big business since individuals would not want to be put in the position of being subjuct to numerous lawsuits, most of which would be brought by profiteering lawyers.

Homer Simpson
June 17, 2010 at 8:03 am

I kinda remember going through some Safety training that was called STOP, developed by DuPont, where they preached that all accidents can be prevented, had good dough-nuts, too! OOhhhh, dough-nuts! If nobody got hurt all month we got dough-nuts! Safety dough-nuts! Delivered by Jennifer, the cutest Young engineer in the plant.
That’s how you instill safety attitudes in American workers, threaten to take away their Safety dough-nuts – delivered by a cute Young engineer, and they howl “We’ll be safe! Give us our dough-nuts! Delivered by Ms. Young”

You are correct. Monsanto went through a management change about 15 years ago that turned it firmly to the dark side. This shows how important the role of a CEO and how disingenuous it can be for guys like Hayward to say they don’t remember or weren’t briefed. They set the tone.

[…] Having served as a company safety officer and having written about industrial safety some years ago, I was very interested in the experience published today by Robert X. Cringely on his I, Cringely blog — see “Doing the Right Thing.” […]

Chris Fabri
June 17, 2010 at 10:33 am

A quick perusal of Wikipedia has very little to mention about safetly at Monsanto, and a lot more on things they’ve done wrong. Which is generally the way it works, but if they were truly as “ethical” as this writer stated, I think more of that would have made it into here:

Considering there are recent accounts of bribes to avoid regulations, and dumping chemicals in a number of locales, they aren’t doing so great. I’m disappointed that Bob didn’t appear to take even a few minutes vetting this.

Jason
June 17, 2010 at 10:56 am

And you’re basing your info. on a Wikipedia article? Pot/kettle/black.

Max
June 17, 2010 at 12:24 pm

There are a few books and documentaries out there with serious research behind them that confirm most of the bad stuff done by Monsanto. Besides, what’s wrong with the Wikipedia article? It’s heavily referenced.

From Wikipedia: In 1980, Monsanto established the Edgar Monsanto Queeny safety award[citation needed] in honor of its former CEO (1928–1960), to encourage accident prevention.

In the early 1990’s Monsanto had figured out how its flagship product Roundup affected plants. They found a way to genetically modify plants to resist Roundup, thereby increasing its effectiveness in agriculture and future sales.

In the mid 1990’s Monsanto spun off its chemical business as a separate and independent company called Solutia. They moved liabilities and retirement obligations to Solutia to remove them from Monsanto’s books. The set Solutia up with a $1B debt — which was a cleaver way for Monsanto to make $1B of profit from the spinoff tax free. Solutia was set up to fail and Monsanto was set up to make $1B tax free income.

Shortly after the Solutia spinoff Monsanto went on a buying spree, buying every seed company they could. The purchases over extended the company and almost put it out of business. Finally a merger with Pharmacia and Pfizer saved the business. In the merger they got Monsanto’s (Searle’s) drug business and paid down Monsanto’s debt.

The CEO was very much into quick gratification. Rushing Monsanto into this new line of business before government approvals were secured, before the market was ready. His haste almost destroyed the company.

Roundup and genetically modified seeds are now Monsanto’s primary source of income. For them to sustain this business model farmers are expected to buy all their seeds each year from Monsanto. It is illegal for them to plant any seeds from their crops. You can grow the corn, but don’t plant any of the seeds from your corn.

Monsanto is making a lot of money right now. However they will soon face a classic business problem. They no longer have a diversified portfolio of products. They have sold or spun off all of their other businesses. At some point a court will rule it is legal for a farmer to plant seeds from his/her own crop. In time weeds will become resistant to Roundup. Monsanto has put all of its eggs in one basket and that can not last forever.

swschrad
June 22, 2010 at 7:06 pm

we already have the Roundup-resistant weeds, as predicted years ago would occur by genetic transfer as the corn and soybeans pollenated the weeds.

in other news yet today, a court has freed Monsanto to start selling Roundup-ready alfalfa, which can get all the grass weeds resistant.

Monsanto is now working to put 2,4-D resistance into those lines of seeds, with some projected to be marketable in a year or two.

that’s protecting the shareholders and making value.

this quarter.

what the hell you got next quarter? past is history, we need our dividends.

and THAT is what is wrong, nobody is permitted to look to medium or long term in business any more.

BT
June 17, 2010 at 11:59 am

I agree with Chris Fabri. Please spend a few minutes vetting Monsanto and you realize they sold their soul long ago. The legacy of 1970’s is the toxic waste pits and superfund sites that still pollute to this day. For shame, please check your facts.

Please WRITE an article rather than picking so minutely on a good one, dismissing as somehow tainted its perfectly valid point.

DanielBob
June 29, 2010 at 9:21 pm

So… you didn’t write this article, but someone else should write an article to critique it?

Hahahahahaha!

Oh. You were serious. :

Tim W
June 17, 2010 at 12:39 pm

I am an engineer with 30+ years in the petrochemical industry. My specialty is Process Control which includes Safety Instrumented Systems and safety shutdown systems. I agree that too few people in top management have any engineering experience. In this case I feel that there is a big distinction between having an engineering degree and having true engineering experience. Some managers did get a technical degree and then went directly on the management path.

Many years ago managers would frequently tell me “you don’t understand the business issues”. At the time I was considering getting my MSCS but got an MBA instead. I realized at this point that many managers were using the comment about engineers not understanding business issues to mask their own lack of understanding of engineering issues and engineering limits and constraints.

Isn’t it interesting… We are now 59 days into the worst man-made environmental disaster in history. The economic damage to the coastal communities along the Gulf coast will be easily 10x greater than Katrina. Given this there has not been a Federal Disaster Declaration.

Lynn
June 21, 2010 at 5:52 pm

“worst man-made environmental disaster in history”

I don’t think so. Why are people so eager to jump on the “worst in history” bandwagon? See the following (including the comments) for a bit of perspective on the issue:

Because you have degree doesn’t mean you have used it or rembered it after 30+ years or keep up with the field

Skeptical Fanboy
June 17, 2010 at 3:51 pm

BP has failed on so many levels, it’s difficult to know where to start. First up is the lax safety culture, which has been documented ad infinitum.

Second is the PR front. BP has continually lied about the size of the flow, claiming they couldn’t do a proper estimate, when something like a dozen different scientists were able to use back-of-the-napkin techniques to estimate flow rates 25-50 times higher than BP initially claimed. The back-of-the-napkin numbers are now remarkably close to what BP and the Coast Guard are telling us is coming out of that well. Tony Hayward & Co. have also repeatedly made gaffes in interviews, showing that they simply don’t get it. Hayward said he wanted his life back, which looked really selfish considering 11 men died. The chairman recently said something about the “little people”.

Apparently, today’s congressional hearings didn’t go well for BP. They continually stonewalled and hemmed and hawed. This is no way to win a PR battle.

So BP failed at safety, and now that their lax safety culture has literally blown up on them, they’re failing at PR. Nobody believes they’ll do the right thing because up until now, they have repeatedly declined to do the right thing and their public statements have only shown a willingness to do whatever it takes to try to deflect the blame, or simply deny obvious facts (such as the existence of huge subsurface oil plumes).

These are comments from a retired accountant who doesn’t know squat about the petroleum industry. My concept of an effective CEO of a large and complex industrial company is as follows.

First is the ability to direct and motivate people. Thus, the CEO must be a natural leader — someone that other people will follow and want to emulate. (However, I don’t know of any college degree that can produce natural leaders.) There will be times when the CEO must be persuasive, and times when ass kicking is needed. The CEO also must be able to influence the leaders in the government and other areas of society.

Second is the ability to build a staff of people with the various skills needed for that particular industry and company. These are advisers that a CEO can rely on to question current company policy and help develop a roadmap to the future.

Third is the ability to listen to and learn from the opinions of others. This is the most difficult and useful trait of an effective CEO. It is human nature to assume that your own belief system has all the answers.

John
June 17, 2010 at 6:24 pm

We can talk about lax safety, poor PR abilities, and question leadership, but a Bob’s friend said “The emphasis was on results, not words.” So far BP has not produced any results. Every day they fail to do so brings greater financial peril to their company.

Say you have a process that’s not as clean as you would like, but you are the best, cleanest, safest producer in the world. There is a demand for the product, and by shutting down, you are leaving the market demand to be filled by those whose methods and processes are worse for everybody.

Now when you can outsource the nasty things half way around the world, then it’s out of sight, out of mind.

John
June 18, 2010 at 1:20 pm

USA tort laws often force this decision.

To use Monsanto as an example, they were the leading producer of transformer oil with contained PCB. After decades of production and use it was learned PCB is very dangerous. Monsanto shut down its Anniston AL operation and moved it to Sauget IL, right across the river from its headquarters and research department. Monsanto worked hard to reduce emissions and to find ways to produce the product safer. Monsanto implement emissions standards and pollution controls in industry and years before the EPA came into existence. As the health risks of the product became more apparent Monsanto stopped making the product, giving up one of its biggest money makers at the time. Other manufacturers stepped in and made the product in Monsanto’s absence for another decade until the EPA banned it. Just a few years agp Monsanto’s spinoff — Solutia agreed to a large settlement on the damages and cleanup in Anniston.

While Monsanto did everything it could to be responsible and do the right thing with this product, the legal consequences of making the product were considerable. This is not to say the community of Anniston didn’t deserve the money and help, they did. The product was found to be dangerous and Anniston was harmed because it was made there. When Monsanto made the product they met or exceeded all USA regulations. They even exceeded the regulations that would be put in place 10 years later. Despite all their best intentions and efforts, making that product at all cost Monsanto and Anniston dearly.

Shipping the production of dangerous materials offshore is a very important issue. Hopefully we are smart enough not to repeat the mistakes of history. But if there is any lesson in Bhopal or with BP, we clearly have not.

Bill H
June 17, 2010 at 9:58 pm

Two points:
Recommended reading Malcolm Gladwell’s Tipping Point, chapter about Korean Airlines safety. Company culture does make a difference. I’m sure in the end it will be clear that no single action by any one person caused the wreck, but rather, there was an accumulation of little shortcuts, apparently minor safety rule skirting, attention lapses, etc that lead to the failure. This stuff happens in a company culture that winks at rules that are a pain in the neck when you’re focused on getting the immediate job done.

Second, as an engineer finishing a 40 year career, I have seen a lot of smart technical people get ‘promoted’ into management positions, but then not provided with additional training for the non-technical skills that are needed. Some do well, some don’t. I don’t think that the MBA is the path for acquiring those skills. Most MBA grads that I have worked with seem to have had a moral-ectomy, and learned financial tricks to make their personal performance look good. The prerequisits for leadership are mental toughness to stay on the high moral ground, strategic, as opposed to tactical, thinking, and a passion for getting whatever the business is done right. A strong focus on personal gain is an impediment to good leadership, but that doesn’t seem to be a filter that is used in selecting much of top management.

I wonder of any of this applies to BP, but the lively discussion made me think these things. I think Bob’s description of Monsanto’s turn toward a safety based culture, and commenters points about the later abandonment of that culture vividly illustrate that safe operation in risky business environments has to be lead from the top management, and required of all levels of personnel. And it’s not just physical safety where that counts, as the financial industry has shown.

Time for Alternatives
June 18, 2010 at 12:19 am

Even BP’s competitors acknowledge that this accident could have equally happened to any of the global oil companies, be they Dutch, American, British or other. So start doling out the questions and criticisms accordingly.

loadaverage
June 18, 2010 at 12:41 am

is this the same monsanto mentioned in food inc.?

MattT
June 20, 2010 at 5:10 am

Yes. It’s interesting to learn there was once a Monsanto that was interested in doing right. They sure aren’t anymore.

Mark Gibson
June 18, 2010 at 2:35 am

Hi Bob,

In 2005 I worked for about a year with a UK software company supplying technology into the operations market for major plant maintenance and management. One of the markets was petrochemical production. The company had developed a software product that would enable data inconsistencies and mature local knowledge to be captured to create context and manageability in large scale hazardous plant.

What I learned from the sales team is that the prospects for selling the technology (which was World class and solved a set of real problems) were difficult, that the plant was typically not owned by the oil company but by a third party operator. That the plant once built, was sold on and being run to produce as much output as it could safely produce without investing in new infrastructure (squeezing profit by running for maximum hours per month). New technology and ideas to operate the plant in a safer manner were not necessarily welcome. “We’ve been running this plant for 20 years without your stuff and we will continue to do so”.

BP was unlucky, it could have happened at 50 rigs and don’t be surprised if it happens next in the North Sea or the Carribean or in the Gulf again.

It may help Americans feel better to kick BP and blame them for this accident, but as the World’s largest consumer of petroleum, this should be a wake-up call for a long overdue shift in energy policy. American foreign and domestic policy has long been dominated by big oil and Detroit and look where that got us.

Im moving to the US in August and I cant buy a diesel car…why?
The current diesel technology in Volvo, Mercedes, Audi, BMW burns cleaner than petrol, produces more power per cubic inch and produces 30-40% better fuel economy. Apart from that its a cheaper and environmentally less damaging to make a diesel engine than a Hybrid…but diesel is a short term measure, we need massive investment to create a long-term sustainable energy supply for domestic and industrial use.
The biggest investment will be required to produce a change in behavior of individuals and an awareness of the massive waste caused by excessive consumption and the squandering of fuel in huge gas guzzling SUV’s which in Europe we still refer to as Yank Tanks.
When petrol is $10 per gallon then we may see a change in behaviour and smaller, more economical vehicles….it wont be long.

Monsanto Dude
June 18, 2010 at 9:09 am

Monsanto would not build an operating unit without a very good process control system. They were prepared to pay 1-1.5% of the cost of the unit for process control — which was a generous amount. The process control system is an integral part of the safety culture. It is used to manage the start up, shut down, and maintenance operations.

At Bhopal for example the operators did not purge a tank of methyl isocyanate before cleaning it with water. Many of the operating steps were done manually. It was the mixture of water and the methyl isocyanate that created the poisonous gas and the resulting accident. In a properly instrumented and controlled process most of the operating steps would be automated. All manual steps would have integral checks and balances…

1) the system would have drained the tank
2) multiple redundant sensors would confirm the tank was empty
3) an operator would confirm the tank was empty
4) a non-reactive material would be used to rinse out and/or neutralize any trace material in the tank
5) then and only then would water be allowed in the tank
6) after the cleaning process — the water would be completely purged so none would remain to react when methyl isocyanate when it re-entered the system

A few lessons for Monsanto from the accident…

The Bhopal process was dependent on human/manual control of key process and maintenance procedures. The safety of the operation was dependent on humans not making mistakes. Enforcement of company worldwide safety policies and the use of full process control would mitigate this risk.

The Bhopal process used a large amount of a dangerous material, methyl isocyanate. Monsanto launched a blue-ribbon team to evaluate every process and the materials used in them. Working inventories of highly dangerous materials were either reduced or eliminated. A worldwide program was started to fully disclose the materials Monsanto uses and to fully equip local response teams to handle an accident.

In the airline industry after every incident there is a thorough investigation. The causes of the incident are found and changes are made to prevent them. Through decades of incremental improvement the aviation industry has achieved its high level of safety. This same mindset was done in the chemical industry. The cost of an accident was too terrible to allow to happen. Safety is a long term continuous improvement process. It is a corporate culture. It is something companies like Monsanto took very seriously.

BP had a terrible accident in 2005. It is clear to those experienced with industrial safety BP did not learn their lessons. Lets be real clear about the implications of BP’s inaction. We are facing the worst man made environmental disaster in history. The economic well being of everyone who lives along the Gulf coast, or owns property, or operates a business has been endangered. Every business will see a big drop in sales for the next 3-5 years. Unemployment will soar in the region.

Barry Reid
June 18, 2010 at 4:35 am

It’s all part of the inevitable cost of consumersim. Cheap oil and products, have to be paid for somehow and everyone in Washington, Westmister, Bonn and Beijing is complicit in this.

Perhaps the howls of rage from the Oval Office and the US parliament are in part to hide the embarassment that the world’s regulators are feeling. Perhaps on some level the people of Louisiana should be asking themselves about the role that they have played in our consumerist society.

Perhaps, rather than focussing on a specific company there would be more to be gained from questioning our culture and why unchecked BIG BUSINESS is still being allowed to destroy so much of the social, environmental and cultural fabric of our lives.

The oil spill is America’s biggest environmental disaster and the BP chief just told Congress he is not kept in the loop…. which begs the question when he intends to be more involved?

If the top guy at BP doesn’t feel a sense of urgency, it is not surprising this oil spill will not be resolved anytime soon.

David
June 18, 2010 at 6:51 am

Wow, you mean to say that two months after the Texas City accident, Monsanto had completely changed the company to reduce risk, had produced 3 binders each 6 inches thick for all staff to implement the safety procedures, and had shut down all its unsafe processes. That’s amazing. I wouldn’t have believed any company could act that quick. BP certainly need to get off its ***, doesn’t it?

(For the sarcasm challenged, Bob has again selected something totally irrelevant to support his vendetta against BP. Now if in 30 years time BP had not changed, it would be different and this article would be relevant.)

Paul
June 18, 2010 at 8:11 am

BP, Monsanto, technology, engineering, MBA’s, whatever… We’re at a turning point in civilization. Our common ways of thinking are destroying us and the planet, and the lastest BP fiasco is just one line in a long reductio ad absurdum proof, though it’s a very fat one, and I hope one of the concluding ones that will get enough of us to wake up and smell the coffee.

Compare our engineering methods with those of nature. Nature works in cycles, using intricate, complex interrelated webs. One being’s waste is another’s food. Nothing is wasted. Overall life expectancy in millions, maybe billions of years, maybe forever. If you look at the history of science, there have always been people who thought in terms of larger mind of nature. They have usually been ignored in terms of number of practitioners, but their wisdom has become absolutely essential now, and there have always been people who think this way. There are plenty of materials available, and plenty of people who have kept this way alive for when the rest of us recognize how necessary it is.

Just one recent example of a book – The Wholeness of Nature: Goethe’s Way Toward a Science of Conscious Participation in Nature, by Henri Bortoft. It’s not touchy-feely, it’s real science, more thorough than the science and policy that spills billions of gallons of oil into the ocean.

John
June 18, 2010 at 10:29 am

Thank you Paul.

As an engineer I know we in the USA could operate on 1/2 of the energy we use today. The process of improving our homes, and retooling industry and our transportation system would create many new jobs and would stimulate the economy for decades to come. It would be like an industrial or technological revolution in the effect it would have on the USA and world economy. All we need is a plan.

Cap and trade is a punishment, repressive approach. It is not an approach based on a vision, a plan, and leadership. The best cap and trade can do is hurt the middle class and increase the gap between the upper and lower class. I true energy plan would create jobs and new industries, expand the middle class, etc.

If we had a true energy policy and if we were using 1/2 as much energy, we probably could produce domestically most of the energy we need. Most of it could be generated from lower risk methods. When we stop draining resources from other countries, more becomes available for global economic growth.

After this lecture we had lectures on what could be done with buildings, power production, transportation, etc. We’ve known what we could and should do for 40 years. It is discussed almost every day in every engineering school. It is not rocket science. The rewards will be tremendous. The problem is we have done nothing for decades.

This article based on congrssional testimony shows how the well failed. The critcal failure being in the construction of the centralizer system. The decisions as to the centralizer design were made by BP personel. Which people making the decisions is not immediately clear. The article does show that BP was trying to save money however the amounts of money involved are tiny compared to the profits from a production facility of this nature and magnitude. I would have to enquire if the guy in charge was in complete control of his mental faculties. Was he on drugs or alcohol or otherwise incompetent? How was his decision making ability compromised? Perhaps the decision maker stood to lose a hefty bonus for a delay in completing the well and he let greed override his good judgement?

Too bad Monsanto isn’t as concerned about the dangers of genetically modified foods as they apparently are about the dangers of chemicals at their plants.

Dan
June 18, 2010 at 11:05 pm

You’re talking about what Monsanto learned in the aftermath. I’d say it’s too soon after the accident to determine what BP will learn from this; they are still dealing with the accident, and still investigating the cause.

It’s not just BP’s problem now, though. It’s Obama’s disaster, too. He’s had two months to deal with it, and he’s accomplished very little. He’s turned away countries that have offered to help by sending us oil skimmers and building sand barriers to protect the wetlands (despite knowing almost immediately that this would be a bigger disaster than the Exxon Valdese). The man that Obama has appointed to oversee the cleanup operation is only a part-timer. And just a couple of days ago, the Coast Guard shut down oil tankers that were skimming oil at the direction of Bobby Jindal, because the Jones Act still has not been suspended. Despite all of his rhetoric about taking responsibility, it seems like Obama has devoted very little time to this issue. Why did it take Obama two months to meet with the chairman of the board of BP? As Jon Stewart pointed out, Obama had time to travel around the country, shmoozing with various groups, but no time to meet with BP. High-level discussions with BP should have started almost immediately.

Yes, BP is at fault for the accident. But Obama is also at fault for allowing this to become an even greater ecological disaster than it should have been.

I just don’t understand why so many bloggers are banging on BP and giving Obama a pass.

This oil spill is one of the worst environmental disasters in history, and It will get worst before it gets better. I’m almost certain that BP has more to cover up than this oil spill. The truth is yet to be seen.

SanC
June 23, 2010 at 7:46 am

No one ever thanks the utility companies for doing their job. They only notice when it goes wrong… So are BP really the worst? What about

… The masters of the universe at Goldmans, Northern Rock, Lehmans et al for the Credit Crunch?

… Union Carbide for Bhopal?

… the Soviet Union’s Atomic Energy Authority for Chernobyl?

… Toyota for their braking systems?

… or any other company who’s processes “systemically” failed?

I wonder if the people at the top of 100,000+ person strong organisations really know about every project and the risks associated? Or as good leaders, do they trust their people (who wants a boss that treble checks everything?). CEOs can’t win can they?

In this case BP are a soft target – Engineering like this is hard, dirty and complex. If it goes wrong it’s difficult to solve and takes time. Should they have started in the first place? Well someone wanted the oil…

Isn’t the real point here that as Oil gets harder to find, the engineering and risk increase significantly. Can you price and engineer a solution that is commercially and operationally viable?

Perhaps only if you’re state owned, and then the taxpayer pays.

Or use less oil, reduce demand and you don’t need to drill for it in such dangerous places?

Jimbo Jones
June 23, 2010 at 10:05 am

At the moment (June 23, 19.05 Irish time), a Google search for “BP” shows no sponsored links (same for “Texaco” and “Shell”).

Is this the same lovely Monsanto that will take a farmers farm if they find the slightest piece of evidence “thier” genetic engineered seed might be in their field. Even if they do not want to use it. What I want to know does Monsanto have a seed if the current seed fails (It seems Monsanto has 80 plus percent of the market and our government allows this) and we have a year or more, or much more with no soybeans? What do we do then?

This story reminds me of a website, EnCanaLies.com that has an article that similarly contrasts how one of Canada’s largest meat packers (Maple Leaf Foods) responded when its products became contaminated with the Listeria bacteria against how one of Canada’s largest oil companies responded to protests and complaints about how its operations were releasing poisonous H2S gas.

The difference between the two companies reactions couldn’t be more different and the source of this difference, as with all companies, is found at the top. It is the leadership of a company that determines the ethics and behaviour of the entire organization. If the CEO is a liar and someone who tolerates or encourages ethically questionable behaviour, then EVERYONE in the organization will eventually model this behaviour. If your CEO is a person of integrity, one who won’t stand for deceit, or buck-passing, then those who last at the organization will likely also behave this way.

gianmarko
June 30, 2010 at 2:58 pm

it’s amusing to see that many people consider corporations as evil entities which will do anything to pull a fast buck, safety be damned. like they are all stupid and dont know that an accident like the macondo well blowout can be a serious disaster and even lethal for the whole company?

drilling offshore is a dangerous business and even the best practices and unlimited resources can NOT reach zero accidents. only way to have zero accidents is not to drill. so i am predicting a future ban of offshore drilling

look at commercial air transport. regulations are strict and pervasive, checks are continuous, the resources invested are MASSIVE. still, every now and then an aircraft goes down

total safety is utopia and can not be achieved. surely not in an industry like oil extraction.

one way or another this fiasco will end up in an energy price increase.

John
July 2, 2010 at 4:56 am

Total safety is utopia. However that does not excuse one from trying. To use your example airline travel is infinitely safer today than it was 50 years ago because of a continuous effort to improve safety. Behind most of the luxuries of modern life are constant safety risks. Electricity and natural gas are inherently dangerous. Imagine if your water utility decided it wasn’t important to disinfect the water. Or if your builder decided to ignore building codes when he/she put the wiring and gas lines in your house. When you use dangerous technology to provide goods and services for society, you have to be responsible with your use of that technology.

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